The Financial Planning Process

The Financial Planning Process has six key steps as follows:

Step 1 - Data Gathering – This process commences in the first meeting and may take a number of meetings to ensure we have sufficient knowledge of your circumstances to prepare appropriate recommendations.

Step 2 - Identifying your Goals – Everybody is different so it is necessary that we clearly identify your specific goals and objectives, both personal and financial. This includes considering goals such as your desired level of income, asset growth objectives, future capital expenditures, estate planning wishes, liquidity, accessibility and inflation protection.

Step 3 - Identifying your Financial Issues – In this step we compare your goals with your current financial situation and formulate a strategy to ensure your goals are achieved.

Step 4 - Preparing your Financial Plan – This written document becomes the blueprint for your overall strategy. Having established your goals and objectives and assessed your overall financial situation, taking into account your risks and aversions, this plan will outline the recommended strategy necessary to achieve your desired goals.

Step 5 - Implementing Your Financial Plan - Once the recommendations are agreed the plan is implemented.

Step 6 - Reviewing Your Plan – This is the most critical part of the financial planning process. We live in a world of constant change and this is certainly no different in the sphere of financial planning. There are three important variables in a financial plan that are guaranteed to change over time:

Markets: Irrespective of where you choose to invest the appropriateness of that investment will change over time. All areas of investment are subject to change, whether it is interest rates, share prices, exchange rates or rental yields. A "set and forget" philosophy is, at best, likely to underperform over time and at worst it could be disastrous.

Legislation: There is no question that the legislative environment will constantly change going forward. History has shown us that we can expect a regular upheaval of superannuation, tax, social security and estate planning laws on a regular basis. Such change necessitates regular changes to a financial structure to ensure that it always remains appropriate.

Personal: Major changes in personal circumstances are less frequent but can often be the most critical. Sometimes they are welcome such as a new family member or a promotion. Sometimes not welcome, such as a redundancy or the death of a family member. Such changes usually necessitate an immediate and significant change in the financial plan.

A thorough review of your financial plan, encompassing all six of the above steps, is an absolute necessity at least once annually.